Page 1 of 37 The Bespoke Report 3/12/21 BespokePremium.com For Personal Use Only—Do Not Forward or Redistribute “What’s it like around there? Are you allowed outside?” A year ago this week, Emmy award-winning New York Governor Andrew Cuomo made headlines when he announced that he was declaring a one- square mile poron of the city of New Rochelle, NY as a COVID ‘Containment Zone’ and would be de- ploying the Naonal Guard to the region. Given the proximity of our offices in Harrison, NY to the region of the country’s first ‘Containment Zone’, we received inquiries from clients around the country asking us what it was like. When we told them that the only difference between life before and aſter the declaraon of the containment zone was that schools and churches in the area were forced to close, they didn’t believe it. Compared to the numerous stories showing pictures of military vehicles in the street and boarded up stores, they were under the impression that the enre area was under maral law. But the Naonal Guard wasn’t deployed to occupy the city of New Rochelle. They were assisng at a newly set up mass tesng site and distribung meals for lunch programs at schools that were forced to close by the governor’s order. And the boarded stores shown in press accounts? They were all busi- nesses that had already been closed for months if not years before anyone had ever even heard of COVID. Remember, even before COVID the environment for brick and mortar retail was challenging at best, and many independent stores had already surrendered to the onslaught from Amazon and other large retailers with an online presence. It’s why we launched the Death by Amazon Index years ago! Other than the church and school closures, there were no other restricons in place and all other stores and business in the area were free to remain open. Don’t get us wrong. Just like the rest of the world, COVID ulmately had a major impact on the area, but the picture portrayed by a number of ini- al press accounts of the containment zone was far different than the facts on the ground. Besides this week marking the one-year anniversary of the original declaraon of the Containment Zone, what’s the point of this story? It helps to serve as a reminder to investors that not just during periods where condions are fluid, but also in calmer mes, reports you oſten hear are not always cor- rect and are oſten slanted by a narrave of the person reporng the news, giving advice, or looking to close the sale. If a reporter is looking to report that a city is under military occupaon, they are going to show pictures of military vehicles, empty streets, and images of dilapidaon. Similarly, a CEO doing the media rounds will probably only highlight the posive aspects of the business while leaving out the lagging units or a pending legal issue. When you’re looking to buy a new appliance, the salesperson could very well be leaving out the fact that the commission on the dryer they are trying to sell you is higher than on the cheaper higher quality opon in the back of the store. As an investor, it’s important not to act solely on the acons and informaon of one specific source. You should always gather as much informaon as you can in order to confirm or dispel a given narra- ve. Now on to this week’s report! Roaring or Boring?
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Page 1 of 37 The Bespoke Report 3/12/21 BespokePremium.com
For Personal Use Only—Do Not Forward or Redistribute
“What’s it like around there? Are you allowed outside?”
A year ago this week, Emmy award-winning New
York Governor Andrew Cuomo made headlines
when he announced that he was declaring a one-
square mile portion of the city of New Rochelle, NY
as a COVID ‘Containment Zone’ and would be de-
ploying the National Guard to the region.
Given the proximity of our offices in Harrison, NY to the region of the country’s first ‘Containment
Zone’, we received inquiries from clients around the country asking us what it was like. When we told
them that the only difference between life before and after the declaration of the containment zone
was that schools and churches in the area were forced to close, they didn’t believe it. Compared to the
numerous stories showing pictures of military vehicles in the street and boarded up stores, they were
under the impression that the entire area was under martial law.
But the National Guard wasn’t deployed to occupy the city of New Rochelle. They were assisting at a
newly set up mass testing site and distributing meals for lunch programs at schools that were forced to
close by the governor’s order. And the boarded stores shown in press accounts? They were all busi-
nesses that had already been closed for months if not years before anyone had ever even heard of
COVID. Remember, even before COVID the environment for brick and mortar retail was challenging at
best, and many independent stores had already surrendered to the onslaught from Amazon and other
large retailers with an online presence. It’s why we launched the Death by Amazon Index years ago!
Other than the church and school closures, there were no other restrictions in place and all other
stores and business in the area were free to remain open. Don’t get us wrong. Just like the rest of the
world, COVID ultimately had a major impact on the area, but the picture portrayed by a number of ini-
tial press accounts of the containment zone was far different than the facts on the ground.
Besides this week marking the one-year anniversary of the original declaration of the Containment
Zone, what’s the point of this story? It helps to serve as a reminder to investors that not just during
periods where conditions are fluid, but also in calmer times, reports you often hear are not always cor-
rect and are often slanted by a narrative of the person reporting the news, giving advice, or looking to
close the sale.
If a reporter is looking to report that a city is under military occupation, they are going to show pictures
of military vehicles, empty streets, and images of dilapidation. Similarly, a CEO doing the media rounds
will probably only highlight the positive aspects of the business while leaving out the lagging units or a
pending legal issue. When you’re looking to buy a new appliance, the salesperson could very well be
leaving out the fact that the commission on the dryer they are trying to sell you is higher than on the
cheaper higher quality option in the back of the store.
As an investor, it’s important not to act solely on the actions and information of one specific source.
You should always gather as much information as you can in order to confirm or dispel a given narra-
tive. Now on to this week’s report!
Roaring or Boring?
Page 2 of 37 The Bespoke Report 3/12/21 BespokePremium.com
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With vaccines in the US ramping up at a rapid pace, we wanted to start out this week with a discussion
of the latest COVID trends both here in the US and around the world. First, we wanted to look at vac-
cines and see how their rollout has impacted trends.
To see how the vaccine rollout has impacted aggregate cases, we wanted to compare four countries.
Two are relatively small (UK, Canada) versus their larger neighbors (US, EU). Two are rapidly expanding
vaccinations (UK, US) while two are struggling (Canada, EU). Two have had very elevated case loads
(UK, US) while two have managed better (EU, Canada). All are in the northern hemisphere and show
similar seasonal patterns for cases and deaths, broadly speaking.
• In the charts at right we show COVID cases
and deaths relative to population, expressed
as z-scores. This adjusts for the relatively
higher caseloads in the US and UK and rela-
tively lower caseloads in Canada and the EU.
• If the vaccine’s widespread uptake was hav-
ing a big impact on total disease burden, we
would expect these metrics for both the US
and UK to be measurably outperforming
Canada and the EU, and that appears to be
the case as shown in the top chart.
• We aren’t yet seeing the same divergence in
deaths. While UK and US deaths are outper-
forming those of the EU to a dramatic de-
gree on a relative basis, Canadian deaths are
also falling rapidly despite much lower vac-
cination rates, suggesting vaccines aren’t
(yet?) the primary driver of declining deaths.
• None of this is an argument vaccines don’t
work. Based on trial results, COVID vaccines
have been among the most effective devel-
oped in history.
• What it may suggest, though, is that vac-
cines plus prior exposures are not yet a high
enough share of the population in the US and UK to explain the recent drop in cases and deaths.
• We would expect broader “effective immunity” dynamics to kick in when a larger share of the pop-
ulation has been either vaccinated or previously infected.
• In keeping with our message from page one, though, it’s still very early in the vaccine’s rollout so it
will take time to get a hold on more definitive data. For now at least, it appears as though in coun-
tries with more aggressive vaccinations programs, the curve is flattening faster.
New Daily Cases Per Capita (7d Average, Z-Score)
Daily Deaths Per Capita (7d Average, Z-Score)
-2
-1
0
1
2
3
4
US
United Kingdom
EU
Canada
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
US
United Kingdom
EU
Canada
Page 3 of 37 The Bespoke Report 3/12/21 BespokePremium.com
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Below we provide an update of some of the key charts we track with respect to vaccines.
• Vaccines administered hit their second-highest daily level of the pandemic Thursday, rising to 75
bps of the US population in total dose terms. Total single doses administered are now 19.8% of the
population, with two-doses regimens completed for 10.2% of the population. The US accounts for
over one-quarter of global doses.
• Allocated doses are rising at a pace of 3mm per day, meaning the backlog of available doses contin-
ues to rise faster than total doses administered. President Biden’s announcement Thursday night
that all US adults would be eligible by May 1st was good for headlines, but it was a very low bar to
set given the pace of vaccine administration.
US Vaccines Reported Administered/Day
Note: per mm
population, trend
is YTD.
7d Avg Doses Above 2mm/Day
US Vaccines Reported Administered/Day
Allocated Doses Still Surging Still Lots of Upside From Allocated Inventories
More Than 32mm Doses Allocated But Not Used
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Vaccination Doses/Day
Trend YTD
Trend Since 2/1
4
6
8
10
12
14
16
18
20
22
Allocated Doses WoW Change (mm)
0
10
20
30
40
50
60
70
80
90
% of Total Allocated Doses Injected
0
5
10
15
20
25
30
35
Allocated But Not Injected Doses (mm)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000U.S. totals Trend
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
Vaccination Doses/Day, 7d Avg
Page 4 of 37 The Bespoke Report 3/12/21 BespokePremium.com
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Shifting focus to the actual trends in COVID case counts, the US and many other areas of the world
have been flattening, but it hasn’t been uniform improvement.
• As shown in the top left chart, Europe has seen a relatively sharp spike in cases in recent days,
while other areas of the world have seen the pace of counts stop declining.
• Again, the US has been a major bright spot, but in Brazil, case counts are at new highs while new
case counts in Chile are at their highest levels since last Spring.
• Within the EU, countries that have seen the sharpest increases include Italy, France, and Sweden.
The curves of case counts in the UK and Spain, on the other hand, have flattened to their lowest
levels since last Fall.
• South Africa saw a steep second wave, but like the rest of the region, its curve has really started to
flatten out in recent weeks.
• Case counts in Asia have been among the lowest in the world and remain that way now despite
some slight increases in the South Korea.
Global New Cases Per Day Per mm Population (7d Avg)
0
100
200
300
400
500
600
700
800
World
Americas Ex US
EU
East Asia
Africa
US
Rest of World
0
20
40
60
80
100
120
World
East Asia
Africa
0
50
100
150
200
250
300
350
Ethiopia
Ghana
Kenya
Nigeria
South Africa
0
100
200
300
400
500
600
700
800
Canada
Brazil
Chile
Mexico
US
0
100
200
300
400
500
600
700
800
900
1000
FranceGermanyItalySpainUnited KingdomSweden
0
20
40
60
80
100
120
140
160
180
200
China
Japan
South Korea
Singapore
Page 5 of 37 The Bespoke Report 3/12/21 BespokePremium.com
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One of the biggest news items of the week was the passage and signing of the $1.9 trillion COVID relief
bill. While the bill lacked even a hint of bipartisanship, one encouraging tangential aspect of the entire
process was that it now seems to be little chance for the Senate to end the filibuster. From an invest-
ment perspective, a precedent setting end to the filibuster would result in increased long-term uncer-
tainty as it would result in more major policy changes and the passage of more extreme policy
measures from whichever party is in power (in this case the Green New Deal or packing the Supreme
Court).
With its passage, the Tax Policy Center released estimates for the COVID relief bill’s impact on after-tax
income.
• The combination of checks and changes to
the child tax credit system will boost annual
cash income by 3.8% across all tax units, but
the distribution of that boost is obviously
skewed: the bottom 20% of the income dis-
tribution will see a 20% increase in annual
income (chart left).
• There are major implications for consumer
spending. Because consumers with the low-
est incomes tend to have a higher marginal
propensity to consume each additional dol-
lar of income, these payments will make
their way into the economy quickly.
So, where do lower income consumers tend to spend most of their income?
• In the chart at right, we show the percent-
age point difference between share of in-
come spent on a given category by the low-
est quintile of earners and the middle quin-
tile.
• Groceries and restaurants are the big stand-
outs. Clothes and Autos are also big.
• Besides where consumers will be spending
there money, some is also likely to be saved,
and find its way in the stock market too.
Tax Policy Center Est. Income Effects of HR 1319
20.1
9.3
5.5
3.62.0
0.4 0.1 0.00
5
10
15
20
25
Esti
mat
ed
$ C
han
ge In
Cal
en
dar
20
21
In
com
e
(%)
Distribution of Cash Income
Spending Share of Income Skew For Lowest-Income
21.82
7.35
4.06 3.812.71
1.75 1.00 0.87
0
5
10
15
20
25
Shar
e o
f Ex
pe
nd
iute
: Bo
tto
m Q
uin
tile
of
20
19
In
com
e L
ess
Mid
dle
Qu
inti
le
Page 6 of 37 The Bespoke Report 3/12/21 BespokePremium.com
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Below, we summarized what happened in the market this week.
• Major US indices turned in a very strong week. Small caps led the way higher rallying more than
7%, while large cap indices like the S&P 500 and Nasdaq 100 lagged with gains of over 2%.
• While growth stocks have been under pressure, they bounced in a big way this week. Worth
noting in the race between the two styles, though, is that small cap value (IJS) is now outperform-
ing small cap growth (IJT) over the last 12 months. In the large and mid cap spaces, growth is still
outperforming, but the gap is narrowing.
• Sector performance also varied widely this week with Energy lagging for a change, while Consumer
Discretionary, Utilities, and Materials all rallied over 4%.
• Performance among international equities was less uniform. China and Australia were both down
on the week, Brazil and Hong Kong both rose less than 1%, and Mexico led the way higher with a
Page 37 of 37 The Bespoke Report 3/12/21 BespokePremium.com
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